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Reinterpreting the Jones critique: A time series approach to testing and understanding idea driven growth models with transitional dynamics

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  • Sedgley, Norman
  • Elmslie, Bruce
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    Abstract

    This paper uses the concept of cointegration and a theoretical framework that incorporates transitional dynamics to re-examine the evidence concerning empirical support for 1st generation, semi-endogenous growth, and Schumpeterian growth. The data for the post-war US economy show that the endogenous innovation approach can be broadly supported by the time series data but the limitations of time series data makes it difficult to use cointegration estimates to make sharp predictions of key model parameters that distinguish different versions of idea driven growth theory. Once capital is included in the knowledge growth model testing alternative growth frameworks can be viewed as a test of the number of cointegrating relationships between macroeconomic variables. Our results suggest a single cointegrating vector, lending some support to fully endogenous growth theories as opposed to the semi-endogenous approach.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Macroeconomics.

    Volume (Year): 32 (2010)
    Issue (Month): 1 (March)
    Pages: 103-117

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    Handle: RePEc:eee:jmacro:v:32:y:2010:i:1:p:103-117

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    Web page: http://www.elsevier.com/locate/inca/622617

    Related research

    Keywords: Growth Innovation Time series econometrics;

    References

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    Cited by:
    1. Pascal Da Costa, 2014. "Semi-Endogenous Growth and Pollution: No Double Dividend in the Long Term," Working Papers hal-00994904, HAL.
    2. Finn Martensen, 2013. "Globalization, Unemployment, and Product Cycles: Short- and Long-Run Effects," Working Paper Series of the Department of Economics, University of Konstanz 2013-16, Department of Economics, University of Konstanz.

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